Section 7 IGST Act: Inter-State Supply

Section 7 of the Integrated Goods and Services Tax Act, 2017 determines when a supply of goods or services is treated as an inter-State supply. This classification is central to deciding whether Integrated GST (IGST) applies.

In simple terms: a supply is generally inter-State when the location of the supplier and the legally determined place of supply are in different States or Union territories. Section 7 also specifically covers imports, specified supplies where the place of supply is outside India, supplies to or by an SEZ developer or SEZ unit, and certain residual supplies that are not intra-State.

What Section 7 determines

The nature of a GST supply cannot be decided only from the billing address or the physical movement of goods. The location of the supplier must be read with the applicable place of supply provisions. For goods, Section 7(1) is expressly subject to Section 10. For services, Section 7(3) is expressly subject to Section 12. Cross-border cases may also require reference to Sections 11 and 13, as applicable.

Situation	Treatment under Section 7
Supplier and place of supply in different States	Inter-State supply
Supplier and place of supply in different Union territories	Inter-State supply
One in a State and the other in a Union territory	Inter-State supply
Goods imported into India until crossing the customs frontiers of India	Inter-State supply
Services imported into India	Inter-State supply
Supplier in India and place of supply outside India	Inter-State supply
Supply to or by an SEZ developer or SEZ unit	Inter-State supply
Taxable-territory supply that is not intra-State and is not otherwise covered by Section 7	Inter-State supply

Section 7 of the IGST Act - statutory text

(1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in-

two different States;
two different Union territories; or
a State and a Union territory,

shall be treated as a supply of goods in the course of inter-State trade or commerce.

(2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce.

(3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in-

two different States;
two different Union territories; or
a State and a Union territory,

shall be treated as a supply of services in the course of inter-State trade or commerce.

(4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce.

(5) Supply of goods or services or both-

when the supplier is located in India and the place of supply is outside India;
to or by a Special Economic Zone developer or a Special Economic Zone unit; or
in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,

shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.

Explanation of the main clauses

Section 7(1): Inter-State supply of goods

For goods, first determine the place of supply under the applicable provisions, including Section 10. If the supplier's location and the place of supply fall in different States, different Union territories, or a State and a Union territory, the supply is inter-State.

Section 7(2): Imported goods

Goods imported into India are treated as an inter-State supply until they cross the customs frontiers of India. The provision should be read with the IGST framework governing imports and the applicable customs law.

Section 7(3): Inter-State supply of services

For services covered by Section 12, the location of the supplier is compared with the place of supply. If they are in different States or Union territories, the service is treated as inter-State.

Section 7(4): Imported services

A supply of services imported into India is expressly treated as an inter-State supply. Whether a transaction is an "import of services" is determined by the statutory definition and the applicable place-of-supply rules.

Section 7(5)(a): Supplier in India and place of supply outside India

Where the supplier is located in India but the place of supply is outside India, Section 7 treats the supply as inter-State. This classification does not by itself establish that the supply qualifies as an export; export conditions must be tested separately under the IGST Act.

Section 7(5)(b): SEZ supplies

Supplies to or by a Special Economic Zone developer or Special Economic Zone unit are specifically classified as inter-State supplies. The tax treatment of qualifying supplies to SEZs must also be read with the zero-rated supply provisions of Section 16.

Section 7(5)(c): Residual inter-State category

This clause covers a supply in the taxable territory that is not an intra-State supply and is not otherwise covered elsewhere in Section 7. It prevents a taxable supply from falling outside the inter-State/intra-State classification merely because it does not fit an earlier clause.

Important related provisions

Practical point: identifying a supply as inter-State is only one step. The taxpayer should separately verify whether the transaction is taxable or exempt, the applicable place-of-supply rule, the rate, time and value of supply, reverse-charge provisions where relevant, and any special treatment such as zero rating.

Official GST and legal resources

For the current legislation, notifications, circulars and portal services, refer to the official resources in the right sidebar. Where a statutory amendment or notification changes the legal position, the official text prevails.

Last reviewed: 27 September 2026. This page is intended as a general legal and tax reference and should be read with the current statutory text, rules, notifications and circulars applicable to the transaction.